Musk Announces Terafab Chip Project in Texas for Tesla, SpaceX, and xAI

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Elon Musk has announced plans to build a new 'Terafab' chip manufacturing facility in Austin, Texas that will be jointly operated by Tesla and SpaceX. The facility will produce advanced semiconductors to power robotics, artificial intelligence, and space data centers across Musk's companies. Musk says the semiconductor industry is moving too slowly to keep up with his growing chip needs, so he is taking matters into his own hands with this ambitious new project.

Why it matters

Musk's Terafab project represents a major vertical integration play, as he seeks to gain more control over the critical semiconductor supply chain to support his companies' growing investments in AI, robotics, and space technology. If successful, the facility could help cement Texas' status as a semiconductor manufacturing hub and provide Musk's companies with a strategic advantage in the race to develop next-generation computing power.

The details

The Terafab facility will start with an 'advanced technology fab' in Austin that will have the equipment to manufacture chips of any kind and test them. Musk says the goal is to eventually support a terawatt of computing power per year, which he expects Tesla, SpaceX, and xAI will need as they ramp up their AI and robotics efforts. The facility is expected to produce two types of chips - one optimized for edge computing and inference, primarily for Tesla's vehicles, robotaxis, and Optimus humanoid robots, and another high-power chip designed for space applications that could be used by SpaceX and xAI.

• Musk announced the Terafab project at an event in downtown Austin on March 22, 2026.
• SpaceX acquired xAI, the AI subsidiary that will use the majority of the chips from the Terafab facility, in February 2026.

What they’re saying

What’s next

Musk did not provide specific timelines for when the Terafab facility will become operational or reach its full production capacity. However, he indicated that the project is a critical priority to ensure Tesla, SpaceX, and xAI have the semiconductor supply they need to support their growing investments in AI, robotics, and space technology.